Debt Relief Cost Breakdown
| Fee Type | Typical Amount | When Charged |
|---|---|---|
| Settlement fee | 15–25% of enrolled debt balance | After each debt is settled |
| Account setup/maintenance | $5–$15/month | Monthly, throughout program |
| Wire/ACH transfer fee | $0–$15 per settlement | At time of settlement |
| Total program cost (example) | See table below | — |
Total Cost Example — $30,000 in Enrolled Debt
| Scenario | Settlement Amount | Company Fees (20%) | Total Paid | Savings vs Full Balance |
|---|---|---|---|---|
| Best case (40% settlement) | $12,000 | $6,000 | $18,000 | $12,000 saved |
| Average case (50% settlement) | $15,000 | $6,000 | $21,000 | $9,000 saved |
| Worst case (60% settlement) | $18,000 | $6,000 | $24,000 | $6,000 saved |
Tax liability on forgiven debt (forgiven amounts over $600 are reported as income to the IRS via Form 1099-C). Potential legal fees if a creditor sues during the settlement process — some companies offer legal assistance, others do not. Credit monitoring and repair costs after program completion. These costs are rarely included in the company's upfront cost estimates.
Frequently Asked Questions
It depends on debt load. For debts under $30,000, debt settlement total costs (settlement amount + fees) may be comparable to Chapter 7 attorney fees ($1,500–$3,500). For debts over $50,000, bankruptcy often costs less in total than settlement fees alone. Always get estimates from both a debt settlement company and a bankruptcy attorney before deciding.
Legitimate companies (and FTC rules for phone/online sales) prohibit charging fees before a debt is settled. If a creditor refuses to settle and no settlement occurs, you should not be charged a fee for that specific debt. Verify this explicitly in any contract you sign.